U.S. equities climbed another 1.4 percent last week, rising each day of the holiday shortened week. The S&P 500 has now gained 3.4 percent since the election. At the sector level, last week’s rise was once again in character with the nature of the rally since the election. Materials and industrials led the way, followed closely by energy and consumer discretionary stocks. Notably, however, the interest rate sensitive groups also fared well, on the leveling off of the surge in bond yields. Telecom, utilities, staples and REITs all enjoyed a strong rebound from their earlier weakness. In fact, only healthcare stocks failed to rise last week, suffering only a fractional loss, however.

Since the U. S. presidential election, the S&P 500 is higher by 2 percent. And, understandably, there has been a lot of focus on the sector winners and losers and the impact of policy under a new administration. But the real story has taken place in the bond market. The yield on the ten-year Treasury note is higher by 50 basis points after climbing another 20 last week. At 2.35 percent, the yield is the highest since July, 2015. That move equates to a price decline in excess of 4 percent in just seven trading days.

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